Fed's Beige Book reports moderate growth in most of nation

Jim PuzzangheraThis post has been corrected. See the note below for details.

WASHINGTON -- The economy grew at a moderate pace in most of the nation this summer as consumer spending rose and the housing recovery continued, the Federal Reserve said Wednesday in its periodic Beige Book report.

The overview of conditions in the central bank's 12 regions indicated that economic growth could be picking up at the start of the second half of the year. The economy grew at an annual rate of 1.8% in the first half of the year.

An improving recovery could lead Fed policymakers to start reducing their stimulus efforts this month.

The Beige Book is not a definitive read on economic activity. It relies on anecdotal reports from regional bank presidents and interviews with business people, economists and others to give a general sense of conditions.

Eight of the Fed's 12 districts reported moderate economic growth from early July to late August, roughly the same as in the July Beige Book. Boston, Atlanta and San Francisco reported modest growth and Chicago said the pace of economic activity in that region had improved.

Consumer spending was up in most districts amid strong demand for automobiles and housing-related goods, such as furniture and appliances, the Fed said. Manufacturing, a key economic sector, "expanded modestly" nationwide, the Fed said.

"Reports from several districts suggested that rising home prices and mortgage interest rates may have spurred a pickup in recent market activity, as many 'fence sitters' were prompted to commit to purchases," the Beige Book reported.

The San Francisco district, which covers California and eight other Western states, reported shortages of construction workers. And the Kansas City district said there were shortages of drywall, roofing shingles and some other building supplies.

But new home sales were down slightly in parts of the Philadelphia and Richmond districts. And overall bank lending activity "weakened a bit."

Most districts reported modest growth, but bank lending activity slowed in the Atlanta, Chicago, St. Louis and San Francisco districts.

[For the Record, 1:05 p.m. PDT Sept. 4: An earlier version of this post stated that the Federal Reserve's Beige Book report indicated that economic growth was picking up in the second half of the year. The anecdotal data in the report indicated only that growth could be picking up.]